Review: Not Getting a Big Tax Refund? You’re Actually Doing It Right
We see these types of articles every year, and there’s a reason for that. A tax refund is not free money. In fact, it’s returning free money that you gave to the government. It’s the difference between what you actually owed and what was withheld from your paycheck. You could (and should) have had access to that money throughout the year.
But you also want to keep it in perspective. Last year, the average refund for folks who got one was about $2,860.
Assuming this holds true this year, even if you assume that you gave them that money at the very beginning of the year, you basically bought the government lunch. On January 4, the first trading day of 2016, the one-year Treasury rate was all of 0.61%. So loaning them that $2,860 should have gotten you all of $17.45.
This isn’t to say that you shouldn’t fix it. You should. There’s no reason to buy the IRS lunch (I’m sure most IRS examiners are very nice people, but still, no). You should keep that money for yourself.
But it’s important to keep everything in perspective. It’s really easy to get caught up in the visible minutiae – like making sure that you don’t get a tax refund – but forget about the stuff that really matters.
It may feel good to adjust your withholding, but it won’t get you meaningfully closer to the retirement that you want. What will get you there is building and maintaining your financial plan.
For more on the things that you should be thinking about, download our ebook 
McLean Asset Management Corporation (MAMC) is a SEC registered investment adviser. The content of this publication reflects the views of McLean Asset Management Corporation (MAMC) and sources deemed by MAMC to be reliable. There are many different interpretations of investment statistics and many different ideas about how to best use them. Past performance is not indicative of future performance. The information provided is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy or sell securities. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this presentation. Indexes are not available for direct investment. All investments involve risk.
The information throughout this presentation, whether stock quotes, charts, articles, or any other statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission there of to the user. MAMC only transacts business in states where it is properly registered, or excluded or exempted from registration requirements. It does not provide tax, legal, or accounting advice. The information contained in this presentation does not take into account your particular investment objectives, financial situation, or needs, and you should, in considering this material, discuss your individual circumstances with professionals in those areas before making any decisions.
